Posted under Blog by VIZIYA WorkAlign® Budgeting Team
All companies use budgets to plan and manage their expenditures. In asset-intensive organizations, maintenance tends to be one of the larger cost centers, but too often its spending is among the least well managed. It’s not that the people responsible don’t try; they just lack the right tools. Frequently, there is also a communications gap between the finance and maintenance departments. VIZIYA’s WorkAlign® Maintenance Budgeting bridges this gap and gives the maintenance department powerful tools to manage its spend.
Asking a maintenance planner or supervisor to predict their next year’s spending and deliver it in a manner that the finance team finds useful is self-defeating. They don’t have the time or motivation to properly capture the data, the tools to compile it, or the know-how to translate it into the proper general ledger (G/L) accounts or corporate cost structures. As a result, maintenance budgets often end up being a series of very large lump sum amounts that are highly inaccurate and non-specific.
Those who attempt to create a maintenance budget will spend substantial hours crunching the numbers in homegrown tools, simple spreadsheets, or inflexible corporate budgeting systems. The finance group will dutifully load the maintenance budget into their financial accounting system and attempt to manage against it.
Regardless, maintenance personnel will spend whatever it takes to repair a production line that goes down, whether or not it is in the budget. If their budget runs dry, they may shortchange preventive maintenance or other less urgent tasks and overlook opportunities to understand the variances or to improve their budgeting processes.
This cycle can be broken. Maintenance is, in fact, a controllable spending item, and the way to control the spend is to have a proper budgeting process and system. Companies of all sizes and every industry will benefit from quick, efficient, and controlled budgeting processes. For a breakdown of the most common budgeting challenges, check out “6 Keys to Creating New Maintenance Budgets.”
VIZIYA WorkAlign Maintenance Budgeting was developed from the ground up to work for maintenance budgeting. It answers the concerns of traditional budgeting methods. An effective maintenance budgeting system lets the maintenance personnel do what they do best – manage the equipment, develop maintenance plans, and create work orders to document activity and capture costs.
It is a mistake to force them to create a second maintenance plan in an entirely separate system just for budgeting purposes because it doubles their effort. Moreover, the two systems will quickly fall out of sync during the year if the budgeting system doesn’t capture actual maintenance activity.
Process simplification is essential. VIZIYA WorkAlign Maintenance Budgeting automates the creation of maintenance budgets and translates maintenance details to financial rollup terms. The tool was designed so that neither group would have to spend much time in the system.
The VIZIYA solution simplifies the process of creating budgets and budget scenarios, including budgets with non-standard terms. It supports allowances for reserve and contingency funds and handles the roll-up of maintenance budgets to finance. Because it is part of your EAM system, it is easy to create, update, and maintain your maintenance budget while easily translating the results into information that the finance team can use.
The ideal maintenance budget is a reflection of data in your enterprise asset management (EAM) system. The EAM system is designed to manage your maintenance plans and track work order costs, and by directly connecting the EAM and budgeting systems, it allows costs and maintenance plan changes throughout the year to flow naturally into the budget system. This real-time flow of information simplifies and automates the budgeting and forecasting process, allowing maintenance personnel to focus their time on correctly entering and creating the data in the underlying maintenance system.
Rather than choosing and exporting data for import into spreadsheets or budgeting systems that require manipulation, the maintenance-specific Budgeting Solution automatically populates a budget with these costs for a more flexible, responsive approach.
Auto-budgeting is unique to VIZIYA WorkAlign® Maintenance Budgeting. It allows the maintenance planner or supervisor, who just spent two weeks building next year’s maintenance plan, to simply hit a button to draw that plan into the Budgeting Solution.
Some work will not be planned in the EAM system. Either the events and costs cannot be predicted, or the resources are not available to develop the work orders. For jobs like this with no recorded history, zero-based budgeting is needed to forecast the costs from scratch. Establishing budget groups helps to organize such assets for budgeting in a logical order and assign ownership to track and manage the spending.
In VIZIYA’s tool, budget groups are user-defined and may align with your existing asset hierarchy and corporate structure. Flexibility was built into the design to accommodate companies of all sizes and any level of maintenance maturity, so they can build their budget structure and workflow to suit their own preferences. This capability is unique to VIZIYA WorkAlign Maintenance Budgeting.
Prior year actuals can provide the basis for new budgets. In the VIZIYA tool, users can copy actual data from a previous year, apply a factor to increase (or decrease) the budget amounts, and then the system will automatically seed the new budget.
Furthermore, the VIZIYA WorkAlign Budgeting Solution provides its users with:
Whenever money is in question, security is very important. VIZIYA’s Budgeting Solution provides a flexible model that allows customers to configure what they want hidden from, and accessible to, the different groups of users. The Budgeting Solution allows a very fine, granular structure that drives which users are allowed to perform actions in the system.
The VIZIYA Solution is designed to mimic the look and feel of a spreadsheet. This simplifies user adoption since spreadsheets are the traditional Budgeting Solution of choice. All budgeting and forecast management is conducted on a single screen, and the tool can be configured to work with a company’s existing budget process. In addition, there is an entire tutorial-style help system built into the VIZIYA WorkAlign Maintenance Budgeting system.
The VIZIYA Solution, developed in collaboration with Alcoa, is being refined based on input from other companies of varying sizes and industries. The resulting robust solution is applicable to a wide variety of asset-intensive organizations.
VIZIYA WorkAlign Maintenance Budgeting is designed as an EAM accessory solution that is not system dependent, nor is it a standalone solution. It is tightly coupled with supported EAM systems, and it relies on the costs, work orders, asset hierarchies, etc., from the EAM system. It also provides an enterprise-level solution for companies that run multiple EAM systems.
Historically, Alcoa’s budget planners guessed at what their future requirements would be without really having a fundamental understanding of the details. This made it extremely difficult to negotiate requested changes as well.
Part of the problem was the sheer size of the available data pool. Alcoa’s North American database, which contains manufacturing, asset management, inventory and other key data sources, was roughly six terabytes in size. It wasn’t feasible to extract snippets of data and convert it into useful information, and there was no available tool capable of automating the process.
Timing was another concern. When the needed information is not readily available for forecasting, it becomes very difficult to create or adjust a budget within a reasonable time frame. Decisions are rushed and unsupported by facts and data. The ability to successfully collaborate and negotiate is also constrained.
Lacking data at the individual equipment level makes it hard to identify what the real problems are from an equipment point of view. A problem that is apparent based on maintenance expenditures alone will not reveal the source of the problem. Consequently, the opportunity to reduce maintenance costs and improve reliability and output is constrained.
When the unexpected occurs, “firefighters” will tackle the breakdown at whatever cost is required to get the process back online, but if the root cause is never solved or the maintenance process is not changed, then that problem will repeat itself and the firefighting cycle will continue.
By implementing a tool such as VIZIYA’s WorkAlign Maintenance Budgeting, it allows companies to avoid the firefighting scenario referenced above. Having a tool of this nature to manage all maintenance spending, with accurate budgets and forecasts and a convenient approval process provides the ability to control your maintenance spend as needed, with full traceability. You can read more about Alcoa’s journey to budgeting best practices in “Why Maintenance Budgets Matter with Alcoa.”
To talk to one of our experts and learn more about the Maintenance Budgeting Solution, Request a Demo Here.